Saturday, March 24, 2007

Much has been written about the tragedy of Singur and Nandigram in West Bengal. Yet not much light has been shed on the real significance of the protests by farmers on land acquisition. Brand Buddhadeb has suffered a serious blow much beyond West Bengal. But, more importantly, an undercurrent of awareness is spreading through the grassroots of society on an almost unheralded issue — the protection of property rights.

This article was published under the title "Ground Reality", in the Hindustan Times, on 24 March 2007.

Political and social activists have been hurling arguments to score points against rivals. If one side stresses on the need for industrialisation, the other calls for inclusive growth. The self-proclaimed champions of the poor are hobnobbing with big businesses, while the Opposition spectrum, from the fringe Left to the far Right, want to be seen to be siding with the rural poor. And business leaders, who have been enjoying the freedom to mobilise capital, want investment opportunities to be sugar-coated with a range of privileges and subsidies, including tax breaks and land at low costs.

Sixteen years after India began dismantling the licence and permit raj, it is clear that reforms have improved the economic environment for entrepreneurs. Yet, the issue of land acquisition in the name of promoting industrialisation or special economic zones (SEZs), shows how deeply entrenched the sense of political patronage continues to be in the influential sections of Indian society.

Nothing else can explain the desire of so many Indian business houses to ask the government to procure land for their projects. Since these businessmen have been the biggest beneficiary of liberalisation of the capital market, one could have expected them to demand a similar liberalisation of the land market in the country.

If businesses cannot legitimately acquire the necessary land for their purposes, then it is the land market that needs to be reformed. Instead, they have sought to eliminate the land market completely by asking the government to act as the middleman and perpetuate the land mafia.Similarly, the opinion among social activists range from those who want land to perpetually remain under agriculture or forests, to others who focus more on an adequate rehabilitation and compensation package. Despite their concern for the poor, most of them fail to realise that property rights is not a luxury of the rich, but a necessity for the poor. The rich can survive in most societies, irrespective of their legal rights, because with their wealth they can buy protection from the powers that be. It is the poor who are left most vulnerable if they are denied the right, because they have no other recourse, except to become political pawns.

Economist Hernando de Soto, among others, has shown that the poor are trapped in poverty primarily because of their inability to capitalise on their assets, including land.

Today, Indian businesses can raise capital freely at home and abroad, they can buy and sell assets, engage in mega mergers and acquisitions. Yet, most Indian farmers hardly enjoy the freedom to buy, sell, lease or rent land. In most parts of India, farm land is regulated under land ceiling and land usage laws. In addition, laws make it difficult to even change crop patterns, and restrict the movement of agricultural produce.

The astronomical rise of real estate prices in urban India is also a reflection of the rigidities that have hobbled our cities. Rent control, land ceiling and zoning, coupled with weak legal avenues for the enforcement of contracts, have all made land in urban India artificially scarce. All — the land mafia, politicians, bureaucrats and businesses — have benefited, except the land owner himself.

Indians have been slowly, but steadily, surrendering the most fundamental of rights — the right to property — from almost the very inception of the Republic. Jawaharlal Nehru began the process with the creation of the Ninth Schedule in 1951, in an attempt to put land acquisition beyond the purview of judicial review. With her populist nationalisation, Indira Gandhi greatly diluted the scope of property rights protections. The first non-Congress government took one more step. In 1978, it amended the Constitution such that property rights no longer remained a fundamental right. Except a few brave voices, hardly anyone mourned the demise of the individual’s right to property.

The law is quite distinct from legislation. It is easy to write legislation that violates the spirit of the law as commonly understood. So the State passed legislations undermining basic principles of law in the name of helping the poor. First, land was sought to be confiscated from big landlords and redistributed to the poor. And now, the same land is being forcefully acquired through the use of eminent domain from the poor to be given over to large private investors.

Once a fundamental legal principle, that of property rights, is sacrificed, ‘might’ becomes right, and people are left vulnerable to the coercive power of the State. Since the communists in West Bengal lay their first claim to legitimacy on rural land distribution in the name of the landless, it is not surprising that they are now caught between a rock and a hard place as they try to facilitate land acquisition for the sake of industrialisation.

Yet, in the past two decades, there has been a steady and growing demand for greater recognition of private property rights in one form or another. Twenty years ago, at the height of the agitation against the Narmada dam, the issue was polarised between whether to build the dam, and the quality of the rehabilitation package for the people who lost their property. In the last few years, the tribal rights debate brought to the fore the issue of securing property rights for forest dwellers.

The violence over land acquisition in Orissa’s Kalinganagar two years ago, and the recent tragedy in Nandigram in West Bengal, mark more milestones on the long road to property rights. A couple of months ago, ministers in the West Bengal government asserted that under the land acquisition laws, consent of the landowner was not required. They would then go on to highlight the compensation and rehabilitation packages. The law remains the same, but the protests in Singur and Nandigram have forced the state government to announce that no land will be acquired without consent.

A similar sentiment at the grassroots in urban India, following the demolitions and sealing drives is forcing the political establishment to recognise the potential political cost of the violation of property rights.

A momentum seems to be building from the grassroots. Property rights could be an issue that unites Bharat and India, the poor and the rich alike. The time seems ripe for a people’s campaign for the restoration of the right to property as a fundamental right. This would empower the people and unleash the much-needed second generation reforms by including all sections of society into the growth path. The tragedy at Nandigram will not be wasted if the country joins hands for a campaign to restore property rights.

Wednesday, March 21, 2007

Fundamental right is not a luxury for the rich, but a necessity for the poor. The rich has the resources to protect their interest by any number of ways, the poor has nothing but the law to fall on. A version of this article of mine had appeared in the Bengali langugage newspaper, the Ananda Bazar Patrika in Calcutta, on 21 March 2007.

A lot is being said about the tragedy of Singur and Nandigram in West Bengal, Parliament has been adjourned, yet not much light has been shed on the real significance of these protests by farmers on the issue of land acquisition. Brand Buddhadeb may have suffered a fatal blow, but despite the ideological melee, an undercurrent of awareness is spreading through the grassroots of society on an almost unheralded issue – protection of property rights.

Political and social activists have been hurling arguments accusations, trying to score points against their rivals. If one wants to stress the need for industrialisation, the other calls for inclusive growth. The self-proclaimed champions of the poor are seen to be hobnobbing with big businesses, while the opposition spectrum from the fringe left to the far right want to be seen to be siding with the rural poor. While business leaders, who have been enjoying the freedom to mobilise capital and want investment opportunities to be sugar coated with a range of privileges and subsidies, from tax breaks to low cost land.

Sixteen years ago India began dismantling the licence and permit raj system. Today it is clear that the reforms have improved the economic environment for many Indian entrepreneurs. Yet the issue of land acquisition in the name of promoting industrialisation or special economic zones (SEZs), shows how deeply entrenched is the sense of political patronage in influential sections of Indian society even today.

Nothing else can explain the desire of so many Indian business houses to ask the government to procure land for their projects. Since these businessmen have been the biggest beneficiary of liberalisation of the capital market, one could have expected them to demand a similar liberalisation of the land market in the country.

If businesses cannot legitimately acquire the necessary land for their purposes, then it is the land market that needs to be reformed. Instead they have sought to eliminate the land market completely by asking the government to act as the middleman and perpetuate the land mafia.

Similarly the opinion among social activists range from those who want land to perpetually remain under agriculture or forests, to others who focus more on an adequate rehabilitation and compensation package. Despite their concern for the poor, most of them fail to realise that property rights is not a luxury of the rich, but a necessity for the poor. The rich can survive in most societies, irrespective of their legal rights, because with their wealth they can mostly buy protection from the powers that be. It is the poor who are left most vulnerable if they are denied the right, because they have no other recourse, except to become political pawns.

Economist Hernando de Soto, and others have shown that poor are trapped in poverty primarily due to their inability to capitalise on their assets, including land.

Today, Indian businesses can raise capital freely at home and abroad, they can buy and sell assets, engage in mega mergers and acquisitions. Yet, most Indian farmers hardly enjoy the freedom to buy, sell, lease or rent land. In most parts of India, farm land is typically regulated under land ceiling laws, and land usage laws. In addition, there are laws that make it very difficult for even changing crop patterns, and restrict movement of produce.

The astronomical rise of real estate prices in urban India is also a reflection of the rigidities that have hobbled our cities. From rent control, to land ceiling, zoning, coupled with a weak legal avenues for enforcing contracts, have all made land in urban India so artificially scarce. All, from the land mafia, to politicians, bureaucrats and businesses have benefited, except the land owner.

Indians had been slowly but steadily surrendering the most fundamental of rights – the right to property – from almost the very inception of the Republic. Nehru began the process with the creation of the Ninth Schedule in 1951, in an attempt to put land acquisition beyond the purview of judicial review. With her populist nationalisation, Mrs Indira Gandhi greatly diluted the scope of property rights protections. And the first non-Congress government took one more step, and amended property rights as a fundamental right out of the Indian Constitution in 1978. Except a few brave souls, hardly anyone mourned the demise of this most of basic right of the individual, the right to property.

It is worth noting that law is quite distinct from legislation. It is easy to write legislation that violates the spirit of the law as commonly understood. So the State passed legislations undermining basic principles of law in the name of helping the poor. First, land was sought to be confiscated from big landlords and redistributed to the poor. And now the same land is being forcefully acquired through the use of eminent domain from the poor to be a given over to big private investors. Once a fundamental legal principle–property rights–is sacrificed, might becomes right, and people are left vulnerable to the coercive power of the State. Since the communists in Bengal lay their first claim to legitimacy on rural land distribution in the name of the landless, it is not surprising that they are now caught between a rock and hard place as they now want to facilitate land acquisition for the sake of industrialisation.

While the intelligentsia, the political leaders and social activists have barely noticed, in the past two decades, there has been a steady and growing demand for greater recognition of private property rights in one form or another.

Twenty years ago, at the height of the agitation against the Narmada dam, the issue was polarised between whether to build the dam, and the quality of the rehabilitation package for the people who lost their property. In the last few years, the tribal rights debate brought to fore the issue of securing property rights for the forest dwellers, although the law greatly constricts the use of land, therefore, suppresses the real value of the property. But at least it brought the issue of land right to the fore.

The violence over land acquisition from Kalinganagar in Orissa two years ago, to the recent tragedy in Nandigram in West Bengal, have added another stone to the long road back to property rights. Barely two months ago, ministers in West Bengal government often repeated that under the land acquisition laws, consent of the land owner was not required. They would then go on to highlight the compensation and rehabilitation packages. Although, the law has remained the same, today the protests in Singur and Nandigram have forced the WB government to announce that no land will be acquired without consent.

A similar sentiment at the grassroots in urban India following the various demolitions and ceiling drives pushed, in this instance, by the judiciary, is forcing the political establishment to recognise the potential political cost of violation of property rights.

Clearly a momentum seems to be building from the grassroots of Indian society. Property rights could be an issue that unites Bharat and India, rich and poor alike. Property rights was eroded because of the intellectual profligacy of the elite in the first three decades of the Indian Republic, the underlying theme of the popular protests in recent years could yet force the elite to recognise the democratic aspirations of the people. The time seems ripe for a broad people’s campaign for the restoration of right to property as a fundamental right. This would empower the people and unleash the much needed second generation reforms by including all sections of society in to the growth path.

75 years ago, Gandhi shook the British Empire by picking salt at a desolate coastal village. The tragedy at Nandigram will not be wasted if the country joins hands for a campaign to restore property rights.

Tuesday, March 20, 2007

Dr R A Mashelkar, one of India's leading science administrators resigned from a government technical committee, last week, in wake of personal and politically motivated attacks from certain quarters. In this article, "Something patently wrong", published in the Hindustan Times, on 20 March 2007, I look at the misguided debate over ever-greening of patents, when there are much more serious problems faced by patients in India.

Last Sunday, Indians woke up to mourn the unexpected loss of its team to Bangladesh in India’s first World Cup match. The news that ought to wake up the nation is the situation that led to the resignation of RA Mashelkar from the technical committee formed to look into India’s patent law. Mashelkar resigned because of personal attacks and political machinations. Among his critics were political activists who put their populist agenda ahead of the country’s interest, and social activists who make a career in perpetuating ill-health.

Mashelkar is one of India’s most respected scientists and a pioneering administrator of its public sector scientific establishment. Most importantly, he encouraged scientists to file patents to harness the commercial potential of innovations. Mashelkar truly realised the potential of the scientific community and foresaw the need for a good intellectual property (IPR) law that could provide an institutional framework for new opportunities.

But over the last few weeks, his critics have portrayed Mashelkar as a Bollywood-style villain. The Mashelkar committee was formed to review technical aspects of the Indian Patent Amendment Act, 2005. From the time it was passed, recognising among others things product patent in pharmaceuticals, there have been questions. One contentious issue was Section 3(d), which states that “the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant”.

The issue here is of ‘ever-greening’ of patents, or an attempt to extend the life of a patent by incorporating cosmetic changes. The Indian law complicated things by using terms like “mere discovery” or “efficacy of the substance” — difficult to define and easy to misinterpret.

The contentious nature of these provisions was also brought to light by a case filed by Novartis before the Chennai High Court. It challenged an order of the patent registrar who refused a patent for ‘Glivec’, although the same product has been granted a patent in other countries. In its report two months ago, the Mashelkar committee had noted that the said provision would be a violation of the Agreement on Trade-Related Aspect of Intellectual Property Rights (Trips).

Unfortunately, this technical recommendation got mired in a new controversy over plagiarism. Certain sections of the recommendations had been directly taken from another study submitted to the committee during its deliberations. Mashelkar immediately apologised to the author whose work was incorporated without due acknowledgement. He also requested the government to withdraw the report and offered to redo it.

The debate over pharmaceutical product patent has always been politicised. Politicians are eager to seize an opportunity to bash MNCs. It is a convenient tactic to divert attention away from India’s dismal healthcare. After all, in a country which has not recognised patent in medicines for over three decades — where 97 per cent of medicines is believed to be off-patent — India is quite far from becoming the world’s healthcare capital.

About 70 per cent of Indians never access modern healthcare systems. No doctor in public sector healthcare can claim that patients’ problems are related to patents. But rather than looking into the whole chain of delivery — medical professionals, diagnostic facilities, dispensaries and hospitals — it is easier to wave the national flag. The reality is that even if there were no patents, or if medicines were distributed free, many patients would still not benefit. Nothing else can explain the failure to provide ORS to diarrhoea patients, or the failure to vaccinate children against polio.

Mashelkar has been criticised by the Indian pharmaceutical industry — an industry so concerned about Indians that they see their growth potential in markets abroad. Indeed, the aspects of the patent law that these businesses are opposed to are similar to the ones under US law, where some of the Indian companies are rapidly filing for their own incremental patents. The US patent law has been criticised but it can hardly be a coincidence that a stable patent law has contributed to making the US the most attractive destination for research and development, hosting some of the largest and best pharmaceutical research establishment, and at the same time being the largest market for patented medicines as well as generic drugs. The US pharmaceutical market today is close to $100 billion, about half of which is generic, and the total Indian market is just about a fifth of the US generic market.

One may differ on the interpretation of Section 3(d). The court is expected to rule on it. But IPR will assume even greater significance in the knowledge economy. And to engage in character assassination of Mashelkar, in an attempt to undermine IPR, will neither improve our healthcare system nor lay the foundation for our entry in to the knowledge era. That surely will not be cricket.

Monday, March 12, 2007

At an online seminar on globalisation organised by the Friedrich Naumann Stiftung, in Manila, in March 2007, I looked at the forces affecting globalisation, and held that critics of globalisation have a political agenda to keep the people disempowered by restricting their choices, and preserving the privileges for the elite.

Globalisation: Power to the people

A lot of the times it seems to me that that debate over globalisation portrays the phenomenon as something new. The communication revolution has drastically changed the speed of information flow, and perhaps many of us have in a sense been disoriented with the pace. So much so that we lost a sense of human history!

Globalisation is a phenomenon as old human civilisation. It started when the first man learned to trade, barter, his or her goods.

Today, there is hardly a product that has not been impacted by some kind of voluntary exchange of one kind or other.

Rice and wheat, which are the staples of most humans on the planet today, are the results of enormous chain of modifications carried out by generations spread across the world, to come to their present forms. Spices were one of the first major agricultural commodities to be traded globally. Cocoa and Coffee are among the two most traded commodity of value for the past few centuries. Cotton and textile products are another example of products shaped by choices made by millions across generations.

Earlier, when the world was poorer, communications and transportation were slower, only the rich could have access to some of these globalised products. Today it is possible to make most of these erstwhile luxuries accessible to most across the planet.

Globalisation therefore is a reflection of popular empowerment. The voluntary choices that people make trigger the supply and demand chains to span the globe in search of the most cost effective solutions.

Far from harmonising the world, globalisation enhances choice for the locals, bringing them closer to the world.

For instance, over a decade, we in Delhi, the Indian capital, would have had to try really hard to find authentic Thai or Mexican restaurants, not even a MacDonald. Today, quite a few have sprung up, greatly enriching the range of choice for the consumers. And advent of choice has stimulated competition, inspiring a lot of local food outlets to greatly improve their product range and services. So it is quite common to find a Macdonald rubbing shoulders with, Indian food chain outlets.

While the locals have been similarly empowered with greater choices, the elite seem to have lost quite a few of their distinctions! Most of the opposition to globalisation today, comes from erstwhile elites, many in their new incarnation as social activists, who feel threatened that some of their privileges are becoming common place. It is these social elites who have often joined hands with economic vested interests, to oppose globalisation as a way to retard the pace of popular empowerment. This clearly political agenda is often clothed with terms like promoting economic self-reliance, protecting social values, or preserving the environment for the future generations.

We need to clearly understand that all these slogans are actually intended to disempower the people, and protect the privileges of the elite.

Lets go global and seize the new opportunities being opened up because of globalisation.